This discussion focuses primarily on the modern state of Israel. For treatment of earlier history and of the country in its regional context, see Palestine, history of.

The nation of Israel is the world’s first Jewish state in two millennia. It represents for Jews the restoration of their homeland after the centuries-long Diaspora that followed the demise of the Herodian kingdom in the 1st century CE. As such, it remains the focus of widespread Jewish immigration, and more than one-third of world Jewry now lives there.

The country, barely half a century old, was born in the midst of war. It took Israel three decades and numerous conflicts, large and small, to achieve its first peace treaty with a neighbouring Arab country, Egypt. That process has been complicated by Israel’s relations with the Palestinians, many of whom were displaced by the Arab-Israeli war in 1948 or came under Israeli rule following the Six-Day War in 1967. Only since the signing of the Oslo Accords in 1993 has an inclusive peace settlement with other Arab states and with the region’s Palestinian Arabs been a possibility.

Israel’s national security policy has been dominated by the prime minister and shaped by coalition politics—often disrupted by social and religious issues—that have characterized the state since its creation. While the country’s two major parties, the left-wing Labour and right-wing Likud, often found a consensus on security issues, especially during crises, they retained an important difference that dates to the early years of Zionism. Both parties affirm Jewish rights to the biblical land of Israel (an area only slightly larger than the U.S. state of Vermont), but Labour has been ready, as the price of peace, to cede sovereignty to the Arabs of part of the area it occupied after the 1967 war, while Likud has insisted that control of that territory is vital to Israel’s security. Neither political party, however, has been prepared to accept the return to Israel of large numbers of Palestinian refugees. Despite extensive peace talks following Oslo, and a peace treaty with Jordan (1994) Israel has not been able to come to an amicable peace with Syria or Lebanon or with the Palestinians. Persistent bouts of violence have dimmed hopes for peace.

Domestically, Israel moved steadily from an economy directed by the state to one that was more market oriented. A novel feature of the earlier economy was the kibbutz, a collective settlement movement that exemplified the Labour-Zionist movement’s ideals of sacrifice and leadership. After Labour lost political power to the nonsocialist Likud opposition in 1977, the kibbutz ideal began to wane and with it the socialist and secular beliefs so strong at Israel’s birth. The huge influx of Sephardic Jews in the 1950s and Russian Jews in the 1980s and ’90s forced more political, social, and economic changes, as these groups acquired increasing power and influence. A crucial unresolved question remained: the relationship between religion and state.

Origins of a modern Jewish state

Zionism

Modern Israel springs from both religious and political sources. The biblical promise of a land for the Jews and a return to the Temple in Jerusalem were enshrined in Judaism and sustained Jewish identity through an exile of 19 centuries following the failed revolts in Judaea against the Romans early in the Common Era. By the 1800s, fewer than 25,000 Jews still lived in their ancient homeland, and these were largely concentrated in Jerusalem, then a provincial backwater of the Ottoman Empire.

In the 1880s, however, a rise in European anti-Semitism and revived Jewish national pride combined to inspire a new wave of emigration to Palestine in the form of agricultural colonies financed by the Rothschilds and other wealthy families. Political Zionism came a decade later, when the Austrian journalist Theodor Herzl began advocating a Jewish state as the political solution for both anti-Semitism (he had covered the sensational Dreyfus affair in France) and a Jewish secular identity. Herzl’s brief and dramatic bid for international support from the major powers at the First Zionist Congress (August 1897) failed, but, after his death in 1904, the surviving Zionist organization under the leadership of Chaim Weizmann undertook a major effort to increase the Jewish population in Palestine while continuing to search for political assistance.

These efforts could only be on a small scale while the Ottoman Turks ruled what the Europeans called Palestine (from Palaestina, “Land of the Philistines,” the Latin name given Judaea by the Romans). But in 1917, during World War I, the Zionists persuaded the British government to issue the Balfour Declaration, a document that committed Britain to facilitate the establishment of a “Jewish homeland” in Palestine. Amid considerable controversy over conflicting wartime promises to the Arabs and French, Britain succeeded in gaining the endorsement of the declaration by the new League of Nations, which placed Palestine under British mandate. This achievement reflected a heady mixture of religious and imperial motivations that Britain would find difficult to reconcile in the troubled years ahead.

Immigration and conflict

The Zionist goal of Jewish statehood was violently opposed by the local Arab leaders, who saw the Ottoman defeat as an opportunity either to create their own state or to join a larger Arab entity—thus reviving the old Arab empire of early Islamic times. British efforts to bring the Zionists and the Arabs together in a cooperative government failed, and serious disorders, escalating into organized violence, were to mark the mandate, culminating in the Arab Revolt of 1936–39. This period also marked the birth of local Jewish defense forces. The largest and most widely representative of the various militias, the Haganah (“Defense”) was a branch of the Jewish Agency, the organization most responsible for bringing Jews to Israel.

The most effective of the main, pre-state militias were associated with political factions from both the right and left wings of Zionist politics. The Irgun Zvai Leumi and its even more violent splinter group, Lehi (also known as the Stern Gang), were affiliated with the ultraconservative Revisionist Party, founded by Vladimir Zev Jabotinsky. (The Revisionists withdrew from the main Zionist institutions in 1935 in protest against Jewish cooperation with the British mandate.) Another group, the Palmach, though technically an elite arm of the Haganah, was heavily influenced by a Marxist-socialist party, Achdut HaAvoda, and recruited many of its members from socialist-oriented kibbutzim. Members of these militias were to play an important role in Israeli politics for the next half century: Yigal Allon, Moshe Dayan, and Yitzhak Rabin were high-ranking members of the Haganah-Palmach, Menachem Begin led the Irgun, and Yitzhak Shamir was a prominent member of the Lehi. Three of these men—Rabin, Shamir, and Begin—would later become prime ministers of Israel.

Britain encouraged Jewish immigration in the 1920s, but the onset of the worldwide Great Depression of the 1930s and the flight of refugees from Nazi Germany led to a change in policy. The British government proposed the partition of Palestine into mutually dependent Arab and Jewish states. When this was rejected by the Arabs, London decided in 1939 to restrict Jewish immigration severely in the hope that it would retain Arab support against Germany and Italy. Palestine was thus largely closed off to Jews fleeing Nazi-dominated Europe during World War II. Despite this fact, the majority of the Jewish population supported the Allies during the war while seeking, when possible, clandestine Jewish immigration to Palestine. The Jewish community, which was less than 100,000 in 1919, numbered some 600,000 by the end of the war. The Arabs of Palestine had also increased under the mandate (through high birth rates and immigration) from about 440,000 to roughly 1,000,000 in 1940.

The pre-Holocaust Zionist struggle to secure international support, overcome Arab opposition, and promote immigration resumed with special fervour after 1945, when the true extent of Jewish losses in Europe became evident. In Britain, the newly elected government of Prime Minister Clement Attlee, alarmed by growing violence in Palestine between Arabs and Jewish immigrants, decided to end the mandate, but it was unable to do so in a peaceful way. Attlee and his foreign secretary, Ernest Bevin, came under pressure by the Zionists and their sympathizers, especially President Harry S. Truman in the United States, to admit the desperate remnant of European Jewry into Palestine; they were equally pressured by local and regional Arab opponents of a Jewish state to put an end to further immigration. Both sides, Arab and Jewish, violently assailed the reinforced garrison in Palestine of the war-weakened British.

Finally, London turned the problem over to the newly formed United Nations (UN), and on November 29, 1947, the UN General Assembly voted to divide British-ruled Palestine into two states, one Jewish and the other Arab. This decision was immediately opposed by the Arabs who, under the ostensible leadership of Hajj Amīn al-Ḥusaynī, the grand mufti of Jerusalem, attacked Jews throughout Palestine as the British withdrew. The fighting was savage, and many civilians were slain: incidents cited include the killing of 250 Arab villagers by a group of Irgun commandos in the village of Dayr Yāsīn and the massacre of 77 members of a Hadassah medical convoy by Palestinian Arabs.

Establishment of Israel

The war of 1948

The Zionist militias gained the upper hand over the Palestinians through skill and pluck, aided considerably by intra-Arab rivalries. Israel’s declaration of independence on May 14, 1948, was quickly recognized by the United States, the Soviet Union, and many other governments, fulfilling the Zionist dream of an internationally approved Jewish state. Neither the UN nor the world leaders, however, could spare Israel from immediate invasion by the armies of five Arab states—Egypt, Iraq, Lebanon, Syria, and Transjordan (now Jordan)—and within a few days, the state’s survival appeared to be at stake.

The Israeli forces, desperately short of arms and training, still had the advantage of having just beaten al-Ḥusaynī’s irregulars, and their morale was high. David Ben-Gurion, the new prime minister, had also, soon after independence, unified the military command, although this process was bloody. When an Irgun ship called the Altalena attempted to land near Tel Aviv in June 1948 under conditions unacceptable to Ben-Gurion, he ordered it stopped. Troops commanded by Yitzhak Rabin fired on the vessel, killing 82 people (Menachem Begin was one of the survivors). The Irgun and Palmach finally consented to the unified command, but relations between the Labour movement Ben-Gurion had established and its right-wing opposition, founded in Jabotinsky’s Revisionist Party, were poisoned for years.

The Arab invaders far outnumbered the Zionists but fielded only a few well-trained units. In addition, some Arab logistical lines were long, making resupply and communication difficult. The most formidable Arab force was Transjordan’s British-led Arab Legion, but the Jordanian ruler, King ʿAbdullāh, had secret relations with the Zionists and strongly opposed a Palestinian state led by his enemy al-Ḥusaynī. Other states, such as Egypt and Iraq, also had different objectives, and this internal strife, disorganization, and military ineptitude prevented the Arabs from mounting a coordinated attack.

Small numbers of Israeli forces were able to keep Egyptian, Iraqi, and Jordanian units from entering Tel Aviv and cutting off Jerusalem from the rest of the newly founded country during the crucial first month of the war. In June all sides accepted a UN cease-fire, and the nearly exhausted Israelis reequipped themselves, sometimes from secret sources. Notable was the clandestine effort by Soviet-dominated Czechoslovakia, which offered Israel both arms and an airfield—Soviet leader Joseph Stalin had decided that the Jewish state might be a useful thorn in the side of Britain and the United States, his Cold War enemies.

Fierce fighting resumed in early July and continued for months interspersed with brief truces. The Israelis drove back the Egyptian and Iraqi forces that menaced the south and central parts of the coastal plain. However, the old walled city of Jerusalem, containing the Western Wall, the last remnant of the ancient Temple destroyed by the Romans and held holy by Jews, was occupied by the Jordanians, and Jerusalem’s lifeline to the coast was jeopardized. The Egyptians held Gaza, and the Syrians entrenched themselves in the Golan Heights overlooking Galilee. The 1948 war was Israel’s costliest: more than 6,000 were killed and 30,000 wounded out of a population of only 780,000.

Armistice and refugees

Initial UN mediation conducted by Swedish diplomat Count Folke Bernadotte produced a peace plan rejected by all sides, and Bernadotte himself was murdered by Lehi extremists in September 1948. When Israel secured the final armistice of the war in July 1949, the new state controlled one-fifth more territory than the original partition plan had specified and rejected a return to the original partition line. Jordan occupied the West Bank, which was much of the area assigned by the UN to the stillborn Palestinian state, and more than 600,000 Arab refugees fled their homes in an exodus that had begun even before May 1948. Some were forced out by Israeli troops, notably from the towns of Lod and Ramla in the strategic area near Tel Aviv airport. The Israeli government refused to permit these refugees, who gathered under UN care in camps in Gaza, the West Bank, southern Lebanon, and Syria, to return to their homes inside Israel, and many Palestinians were to stay in these camps indefinitely.

Israel’s victory in the war did not bring peace. The Arabs, who were humiliated by defeat and still bitterly divided, refused to recognize the Jewish state. In early 1949, the Arab nations announced a state of war with Israel and organized an economic and political boycott of the country.

The Ben-Gurion era

Emergence of a nation

The new Israeli state thus had to deal with challenges similar to those faced by the pre-1948 Zionist movement and needed foreign assistance, an effective strategy to hold off the Arabs, and massive Jewish immigration to settle the land in order to survive. All of this had to be done at once, and none of it could be possible without Israeli national unity.

Israel’s first regular election in 1949 returned Ben-Gurion to power but did not give his Mapai (Labour) Party a majority. This set a pattern, and every Israeli government since independence has been formed as a coalition. Ben-Gurion sought a centrist position, condemning those to his left as pro-Soviet and those to his right as antidemocratic. He buttressed these arrangements by adding the Zionist religious parties to his largely secular coalition in what became known as the “status quo.” The Orthodox Jewish religious parties backed Ben-Gurion on security issues, while Ben-Gurion supported an Orthodox monopoly over the control of marriage, divorce, conversion, and other personal status issues. Part of the status quo, however, included rejecting the idea of drafting a written constitution or bill of rights, and the Jewish content of the Jewish state thus would be defined by the rough-and-tumble of Israeli politics and the evolution of Israeli society.

During the early years, Israel had to absorb a major influx of immigrants, including several hundred thousand nearly destitute Holocaust survivors and a large influx of Sephardic Jews from Arab states, who felt increasingly insecure in their home countries following the Arab defeat in 1948. As a result, the Knesset passed the Law of Return in 1950, granting Jews immediate citizenship. This law, however, proved to be controversial in later years when the question of “who is a Jew?” raised other issues in the Jewish state, including those of the immigration of non-Jewish relatives, religious conversion, and, in light of the Orthodox monopoly over such matters, the issue of who is truly qualified to be a rabbi. Ben-Gurion’s coalition was also frequently disturbed by quarrels over education and the role religion was to play in it. Orthodox support for the government often faltered over what they saw to be state interference in a religious domain.

No less serious was the question of ethnicity. The Sephardim, or Oriental Jews, were mostly from urban and traditional societies, and after arriving in Israel they encountered an Ashkenazic, or European, Zionist establishment intent on creating a new Israeli culture and settling these predominantly urban newcomers in rural and isolated villages and development towns. The Sephardim soon grew to resent what they regarded as a patronizing Ashkenazic elite, and eventually this was to hurt Labour at the ballot box.

Israel was impoverished, and its economy emerged from severe austerity only after 1952 when the country began to obtain substantial international aid, including grants from Jewish charities, revenue from the sale of bonds, and U.S. government assistance. Beginning in 1953, Ben-Gurion secured economic aid from what was then West Germany, a highly controversial act that was seen by many as reparations for the Holocaust. This action brought about violent protests led by members of Menachem Begin’s Herut Party (the successor to the Revisionists), who felt that any such aid would be an abomination.

Continuing tensions

Despite its victory in the 1948 war, Israel soon faced new and severe threats. Arab refugees infiltrated the armistice lines seeking to reclaim fields and houses. Soon, irregular Arab forces, drawn from refugee camps outside Israel’s borders, began to attack Israeli villages, farms, and road traffic. Israel also contained a sizable minority of Arabs (then roughly one-sixth of the population), who were kept under military rule in certain areas until 1966 and, in some cases, were relocated away from border zones.

The Israelis intensively cultivated the land on their side of the border, while the Arabs tended to leave their side barren—hence the phrase “green line,” referring to the border between the two sides. The green lines themselves were difficult to defend; only 12 miles (19 km) separated Jordanian army positions from the Mediterranean, and the road connecting Jerusalem with the rest of the Israel was within rifle range of Arab sharpshooters. Israel’s potential allies, including the United States, were preoccupied with the Cold War and were willing to placate Arab leaders in order to limit Soviet influence among the Arab states, especially Egypt, which looked to Moscow for help against Britain and France, the remaining colonial powers in the region.

Israel’s best chance for peace was King ʿAbdullāh of Jordan, but in 1950 Palestinian and Arab opposition forced him to abandon a secretly negotiated nonbelligerency agreement. When the Egyptians tried unsuccessfully to establish a rump Palestinian state in Gaza under al-Ḥusaynī, ʿAbdullāh announced the annexation of the West Bank, which his country had occupied two years earlier. Then, in July 1951, the Jordanian king was assassinated on the Temple Mount in Jerusalem by a Palestinian. His grandson, the future King Ḥussein, barely escaped injury and was to continue ʿAbdullāh’s policy of clandestine contact with Israel but, like his grandfather, never felt politically strong enough to make a separate peace.

In the period 1949–53 Arab attacks killed hundreds of Israelis, four-fifths of whom were civilian. In early 1953 Israel decided to take the offensive against Arab guerrillas who were infiltrating from Jordan and the Egyptian-run Gaza Strip. The Israel Defense Forces (IDF) escalated retaliations, fighting pitched battles not only with guerrillas but with regular Jordanian and Egyptian army units. The Israelis also launched undercover operations, one of which, the so-called Lavon affair, was a botched attempt by Israeli intelligence to hurt Egypt’s reputation in the United States by staging attacks on U.S. facilities in Egypt and blaming Arab extremists.

The Suez War

The Israeli raids humiliated Egypt’s nationalist government headed by Gamal Abdel Nasser, a veteran of the 1948 war and leader of the group that had overthrown King Farouk in 1952. Nasser sought to lead the Arabs in expelling British and French imperial influence and regarded Israel as a symbol of foreign aggression. After he failed to obtain American arms to repel the Israeli attacks, Nasser trumped both Israel and his Western adversaries when in October 1955 he signed a security agreement with the Soviet Union and a major arms deal with Czechoslovakia that threatened overnight to erase Israel’s tenuous margin of military superiority, especially in aircraft. He also announced a blockade of the Strait of Tiran, the outlet of Israel’s southern port city of Elat.

Ben-Gurion, exhausted by political struggles, had left the premiership in late 1953 to Moshe Sharett, who hoped that vigorous international diplomacy might relieve Israel’s insecurity. It did not. Ben-Gurion had a different approach, and returning as prime minister in late 1955 after the Czech-Egyptian arms deal, he soon began to plan a preemptive attack against Egypt before that country’s new weaponry gave it strategic superiority. The preparations for an Israeli attack coincided with the Anglo-French decision to regain the Suez Canal, which Nasser had nationalized in July 1956 despite agreements putting it under international control. The French brokered a secret alliance with Israel and Britain, and in October IDF troops, under the leadership of Moshe Dayan, swiftly broke the Egyptian lines in the Sinai. The Israeli attack provided the cover for a ruse in which the British and French invaded the canal zone under the pretext of protecting it. This duplicity infuriated American President Dwight D. Eisenhower, who compelled the British and French governments to withdraw their troops, effectively ending much of the influence of those two countries in the region. Israel was also compelled to return to the old armistice lines, but not before the United States had agreed to placing a UN peacekeeping force in the Sinai. American Secretary of State John Foster Dulles also promised in writing that the United States would treat the Strait of Tiran as an international waterway and keep it open.

These arrangements did not lead to peace negotiations, but they did impose a calm over Israel’s southern border for nearly a decade. A regional arms race began in the absence of any movement toward peace, and Shimon Peres, Ben-Gurion’s deputy defense minister, found France to be a willing supplier. The French-designed nuclear reactor in Dimona was widely suspected of being the kernel of an Israeli nuclear weapons program, while French Mirage jets became the backbone of Israel’s air force. The Israelis also obtained a large indirect supply of arms from the United States, with West Germany as the intermediary. Israel, under the leadership of IDF Chief of Staff Yitzhak Rabin, turned its military into a highly professional organization.

Labour rule after Ben-Gurion

Ben-Gurion stepped down as prime minister in June 1963, angered by the results of a review of the decade-old Lavon affair that had not, in his view, attached blame adequately to those responsible for that failed and illegal operation. His efforts at building the Israeli state had also brought him into conflict with his own party’s ideology, the Orthodox religious establishment, and the international Zionist movement. Gathering about him a group of younger leaders in 1965, notably Shimon Peres and Moshe Dayan, Ben-Gurion organized a new political party, Rafi, though he eventually retired from politics permanently in 1970 when that party failed to generate support.

The Six-Day War

Ben-Gurion’s successor, Levi Eshkol, had much less experience in defense issues and relied heavily on Rabin. Neither the Jordanian nor the Syrian borders were quiet during the years leading up to the Six-Day War, but all Israelis were taken by surprise when in May 1967 increasingly violent clashes with Palestinian guerrillas and Syrian army forces along Lake Tiberias led to a general crisis. The Soviet Union alleged that Israel was mobilizing to attack Syria, and the Syrian government, in turn, chided President Nasser of Egypt for inaction. Nasser then mobilized his own forces, which he promptly sent into the Sinai after he ordered that UN forces there be withdrawn, and announced a blockade of the Strait of Tiran. The encirclement of Israel was complete when King Ḥussein of Jordan, despite secret Israeli pleas, felt compelled to join the Arab war coalition.

In reaction, Eshkol mobilized the IDF and sent his foreign minister, Abba Eban, on a futile trip to seek French, British, and American aid. After Rabin suffered a breakdown from exhaustion, the coalition parties forced Eshkol to appoint Moshe Dayan as defense minister and to create a national unity government that included Menachem Begin, the main opposition leader. The next day, June 5, Israeli planes destroyed the Egyptian air force on the ground in a preemptive strike that began the total rout of all Egyptian, Jordanian, and Syrian forces. Israeli troops captured huge quantities of arms and took many prisoners. Six days later, Israeli troops stood victorious along the Suez Canal, on the banks of the Jordan River, and atop the Golan Heights. Most significant to all involved, Israel had captured the remaining sections of Jerusalem not already under its control, including the Old City and the Western Wall.

Troubled victory

Israel’s triumph in the Six-Day War (the name by which this conflict became known) brought new territories—the Sinai Peninsula, the West Bank, the Gaza Strip, the Golan Heights, and East Jerusalem—under Jewish control. However, the war also brought new complications, including rule over more than one million additional Palestinians in the occupied territories; extended military lines along the Suez Canal, the Golan Heights, and the Jordan River that severely strained its small standing army; and strong international opposition to the expansion of Israeli control, especially the absorption of the Old City of Jerusalem. Protesting Israel’s surprise attack, French President Charles de Gaulle imposed an arms embargo on Israel, depriving the air force of its only source for advanced warplanes. This situation was resolved when the United States agreed to supply Israel with U.S. fighters to replace the French planes.

It was not clear how military victory could be turned into peace. Shortly after the war’s end Israel began that quest, but it would take more than a decade and involve yet another war before yielding any results. Eshkol’s secret offer to trade much of the newly won territory for peace agreements with Egypt, Jordan, and Syria was rejected by Nasser, who, supported by an emergency resupply of Soviet arms, led the Arabs at the Khartoum Arab Summit in The Sudan in August 1967 in a refusal to negotiate directly with Israel. The UN Security Council responded by passing Resolution 242 in November, demanding that Israel withdraw from “occupied territories” and that all parties in the dispute recognize the right of residents of each state to live within “secure and recognized borders.” The wording of this statement became crucial to peace negotiations for years to come. By not stating “all the occupied territories” in the English version—the only one accepted by Israel—the resolution left room for the Israelis to negotiate. The Palestinians, the residents of these territories, were mentioned only as refugees, it being presumed that Jordan would represent them.

Nearly two years of fruitless mediation ensued while Israel held the occupied territories with a minimum of force, relied on its air power to deter Arab attack, and—adhering to Dayan’s light-handed occupation policy—disturbed the Palestinian population under military rule as little as possible. The Israelis left the Temple Mount in Jerusalem, the local Arab institutions, and indeed the Jordanian legal code throughout the West Bank in the hands of the Palestinians, just as they left Egyptian regulations in place in Gaza.

The Israeli and Palestinian economies were to develop strong links over the next decades, as the underemployed Arab workforce in the occupied territories gravitated to Israeli industries that were chronically short of unskilled labour. Eventually more than 150,000 workers would make the daily commute to Israel, returning to the West Bank and Gaza at night. While the export of Israeli goods to the occupied territories became lucrative, it formed but a small part of the economic exchange between the two sides.

Meanwhile, the Israeli government moved to reclaim areas in the newly occupied territories that had been settled by Jews before 1948, including the Etzion Bloc, an Israeli community on the approach to Jerusalem that had been lost to Jordan after heavy fighting during Israel’s war of independence. After the Arabs rejected a quick peace, Yigal Allon, a leading Labour politician and a hero of the 1948 war, devised a plan to settle Jews in strategic areas of the West Bank, Gaza, Sinai, and the Golan Heights. Israel also enlarged the municipal boundaries of Jerusalem and developed new neighbourhoods in order to establish a Jewish majority in the capital; and in the Old City, the government reconstructed the historic Jewish quarter. However, except for East Jerusalem, where the Jewish population increased dramatically in the years of Labour dominance, by 1977 only about 5,000 Israelis lived in these so-called strategic settlements. Other Israelis, guided by the prominent Rabbi Zvi Yehuda Kook, believed that settlement everywhere in the biblical land of Israel would hasten the messianic era. Israelis of this mind established the Gush Emunim (“Bloc of Believers”) organization in the West Bank city of Hebron in 1968.

The war of attrition

In early 1969 Egypt began what became known as the “war of attrition” against Israel. Using heavy artillery, new MiG aircraft, Soviet advisers, and an advanced Soviet-designed surface-to-air missile system, the Egyptians inflicted heavy losses on the Israelis. Golda Meir, who became Israel’s prime minister following Eshkol’s sudden death in February 1969, escalated the war by ordering massive air raids deep into Egypt. These raids were suspended, however, after the Soviet pilots began to fly combat patrols over parts of Egypt, and the battle shifted to the canal zone. Israel was also beset by guerrilla raids from Jordan, launched by Yāsir ʿArafāt’s Palestine Liberation Organization (PLO). These attacks were often on nonmilitary targets, and Israel soon stamped the PLO as a terrorist organization and refused to negotiate with it.

U.S. President Richard Nixon feared an eventual Israeli confrontation with Moscow and sent Secretary of State William Rogers to intervene with a complex cease-fire proposal, which was accepted by Israel, Egypt, and Jordan in August 1970. This plan specified limits on the deployment of missiles and revived a year-old diplomatic initiative (the Rogers Plan) that insisted on an exchange of territory for peace on all fronts.

The Egyptians and Soviets soon violated the agreement by moving their missiles closer to the canal. In Jordan, Ḥussein’s acceptance of the cease-fire ignited savage fighting between the Jordanian army and several PLO militia groups. As the battles intensified, Syria sent tanks to aid the Palestinians, but coordinated Israeli, American, and Jordanian military moves defeated the Syrians and expelled the PLO, whose forces sought refuge in Lebanon.

Meir’s gamble had succeeded: Israel’s willingness to risk confrontation, even with Soviet pilots along the canal, had strengthened relations with the United States. Ḥussein’s recovery of control in Jordan demoralized Palestinian resistance while securing Israel’s eastern border. When Nasser died in September 1970, his successor, Anwar el-Sādāt, did not renew the fighting, seeking instead a partial Israeli pullback from the Suez Canal. Israel eventually rejected this idea, but the crisis had passed.

The decline of Labour dominance

The Yom Kippur War

On October 6, 1973—the Jewish Day of Atonement, Yom Kippur—Egyptian and Syrian forces staged a surprise attack on Israeli forces situated on the Suez Canal and the Golan Heights. Israeli confidence in its early warning systems and air superiority was misplaced, and Egyptian missiles were soon taking a heavy toll of Israeli warplanes. The intensity of the Egyptian and Syrian assault, so unlike the situation in 1967, rapidly began to exhaust Israel’s reserve stocks of munitions.

With Israel threatened by catastrophe, Prime Minister Meir turned to the United States for aid, while the Israeli general staff hastily improvised a battle strategy. Washington’s reluctance to help Israel changed rapidly when the Soviet Union launched its own resupply effort to Egypt and Syria. President Nixon countered by establishing an emergency supply line to Israel, even though the Arab nations imposed a costly oil embargo, and various American allies refused to facilitate the arms shipments.

With reinforcements on the way, the IDF rapidly turned the tide. A daring Israeli helicopter assault disabled portions of the Egyptian air defenses, which allowed Israeli forces commanded by General Ariel Sharon to cross the Suez Canal and threaten to destroy the Egyptian Third Army. On the Golan, Israeli troops, at heavy cost, repulsed the Syrians and advanced to the edge of the Golan plateau on the road to Damascus. At this point, the United States, alarmed by Soviet threats of direct military intervention and on nuclear alert, secured a cease-fire in place.

Political and social repercussions of the war

Egypt’’ Sādāt persuaded U.S. Secretary of State Henry Kissinger that his country was ready to abandon both its Soviet and Syrian allies for a fresh start with the United States; only Washington, in Sādāt’s view, could effectively influence Israel to return the Sinai without further bloodshed. Kissinger, supported by Nixon, successfully pressured Israel to end the war short of a complete Egyptian military defeat and then, through intensive travel between the various capitals—what soon was being called shuttle diplomacy—achieved disengagement agreements on both the Egyptian and Syrian fronts during 1974. This became known as the “step by step” process, which was intended to fulfill the intent of Security Council Resolution 242 that territory be exchanged for peace.

Golda Meir’s government resigned in April 1974, exhausted and discredited by the war. Still, the Labour Party won a narrow election victory in June by selecting Yitzhak Rabin, hero of the 1967 war and former Israeli ambassador to Washington, to lead its list. The first native-born Israeli to become prime minister, Rabin predicted a period of “seven lean years” until the West, including the United States, would end its heavy dependence on Arab oil. He argued that Israel therefore needed to trade space for time, to coordinate closely with Washington, and to encourage Egypt’s new pro-American policy.

Rabin reached a second disengagement agreement with Egypt in September 1975, but little progress was made with Syria. On what had been the “quiet” front—the West Bank and Gaza—the Labour government’s preferred strategy of negotiations with the more amenable King Ḥussein of Jordan (the so-called “Jordanian option”) was threatened in October 1974, when an Arab summit conference in Rabat, Morocco, declared ʿArafāt’s PLO to be the sole representative of the Palestinians. A year later, Rabin obtained secret assurances from Kissinger that the United States would not recognize the PLO as an entity representing the Palestinians unless that organization first ceased terrorism and recognized Israel’s right to exist.

Meanwhile, the Gush Emunim movement on the West Bank gathered force after the Yom Kippur War and between 1974 and 1987 planted small communities near large Arab populations, greatly complicating Israeli policy and arousing international opposition. The secular Israeli government opposed such efforts but rarely used force to dislodge the settlers, who invoked Zionist rights to the homeland in their defense. Still, they numbered fewer than 4,000 when the opposition Likud government of Menachem Begin came to power in 1977.

Diplomatic impasse

The Yom Kippur War left the country in bad economic shape. An accelerating rate of inflation just before the conflict was suddenly combined with a stagnant economy; prices continued to rise even as demand and production fell. The international recession reduced demand for Israeli exports, and, for the first time in years, unemployment became a problem. On top of this, Israel became heavily indebted by arms purchases—partially offset by U.S. aid—and the country’s international status suffered. One by one, most of Israel’s carefully cultivated African friends broke relations under the threat of Arab oil sanctions, leaving the Jewish state alone with an equally isolated South Africa. Further complicating the situation for Israel, the UN General Assembly passed Resolution 3379 in 1975, which equated Zionism with racism, and the PLO gained increasing European and Asian support. Meanwhile, Rabin was losing political ground at home, harmed by infighting and corruption. Even the remarkable success of Israel’s July 1976 raid at the Entebbe, Uganda, airport—in which commandos rescued the Israeli passengers of an Air France plane hijacked by German and Palestinian terrorists—was of little help. The former general, new to politics, found it difficult to dominate a cabinet in which his chief rival, Shimon Peres, was defense minister, and few others owed him any political allegiance.

A further blow to Rabin fell when he visited Washington in March 1977 to meet with the new American president, Jimmy Carter, who advocated a "comprehensive approach" to Middle East peace instead of the Kissinger step-by-step plan. Carter sought an international conference to resolve all the major issues between Israel and the Arabs and advocated a “homeland” for the Palestinians. For Israelis, this notion (and its similarity to the wording of the Balfour Declaration) was a code word for a Palestinian state, and they hotly opposed it—not least because it also implied a leadership role for the PLO. Rabin, facing a major quarrel with the United States and beset by a personal scandal (his wife had maintained an illegal bank account in Washington from his days as ambassador), resigned in April, and Shimon Peres became Labour’s new party leader.

Israel under Likud

To general surprise, the Likud Party, led by Menachem Begin, won the May 1977 election, inaugurating the first non-Labour-led government in Israel’s history. Begin’s campaign benefited immensely from Sephardic resentment over the patronizing attitude of the Labour establishment and its treatment of non-European Jewish immigrants as second-class citizens. The Sephardim supported Likud in large numbers. In addition, a new “clean government” party drew votes from Labour, and its leader, Yigael Yadin, an eminent archaeologist and a hero of the 1948 war, joined the cabinet. Also included in Begin’s cabinet were Ezer Weizman, an air force commander in 1967 and architect of the Likud political strategy, and, to the shock of many Labourites, Moshe Dayan, who agreed to become foreign minister. Begin also attracted the National Religious Party to his coalition.

The beginning of the peace process

Begin strongly opposed any territorial compromise on the West Bank, which, like many Israelis, he felt to be an inalienable part of Israel—the historic Samaria and Judea. He also argued that Resolution 242 did not require withdrawal from this area. The new Israeli leader put off a crisis with Washington by discarding Rabin’s notion of “coordination” and declared simply that Israel wanted to sit down with its neighbours to negotiate peace. Meanwhile, Begin inaugurated a policy to strengthen Israel’s hold on the West Bank through an extensive settlement program overseen by Ariel Sharon, the minister of agriculture.

Carter spent the summer in futile efforts to convene an international conference, finally approving a Soviet-American communiqué in October 1977 that was intended to stimulate diplomacy; instead, it outraged both Israel and the U.S. Congress, many of whose members condemned Carter for concessions to Moscow. These mishaps convinced Sādāt that American tactics were giving his erstwhile Soviet and Syrian allies a veto over any diplomacy, which could lead to a new war in which Egypt would likely pay the highest price. Secret negotiations were held between Israeli Foreign Minister Moshe Dayan and Sādāt’s personal representatives, after which the Egyptian president surprised the world by flying to a delighted Israel in November 1977, where he and Begin addressed the Israeli Knesset.

The two leaders could not agree, however, on the details of a comprehensive peace, and the negotiations were complicated by events in Lebanon. Following its eviction from Jordan in 1971, the PLO had established itself there, exacerbating the volatile political situation in that country and contributing to its collapse into civil war in 1975. Both Israel and the United States had reluctantly consented to Syria’s military intervention in Lebanon that same year, but the result was a partitioned state with the PLO dominating the south of the country, which was now a launching point for terror attacks against Israelis living in the Upper Galilee. In March 1978, Israel invaded Lebanon to drive the PLO away from the border but succeeded only partially in this goal before withdrawing from that country, under international pressure, in June. This episode strengthened Israel’s ties with a Lebanese Christian militia known as the Phalange, who benefited from Israeli weapons and training.

Camp David

The faltering Egyptian-Israeli negotiations were finally rescued when Carter convened a summit at the presidential retreat of Camp David, Maryland, in September 1978. In this secluded site—an “elegant jail,” Begin called it—Carter shuttled between the two leaders over a 12-day period, and out of these negotiations emerged the Camp David Accords. The accords were a framework for a comprehensive peace between Israel and the Arab states based on Resolution 242 and called for all the parties to complete peace treaties under its principles. Rather than giving the Palestinians full independence, the accords offered them Begin’s concept of autonomy, which provided for five years of limited Palestinian self-government to be followed by talks on final status between Israel and a Jordanian-Palestinian joint negotiating team.

The Camp David Accords earned Sādāt and Begin each a share of the 1978 Nobel Prize for Peace, but the subsequent peace process proved far more difficult than the parties expected. It took seven more months for Egypt and Israel to reach a final agreement, which was signed on March 26, 1979, and called for a three-year phased Israeli withdrawal from the Sinai, limited-force zones, a multinational observer force, full diplomatic relations between the two countries, and special provisions for Israeli access to the Sinai’s oil fields. The United States also agreed to provide large amounts of financial aid to both Israel and Egypt, part of which paid for the relocation of Israeli military installations. Israel’s settlements in the Sinai were also evacuated, despite public Israeli protests.

Syria, Iraq, and the PLO were outraged by Egypt’s actions and joined diplomatic forces to suspend Cairo from the Arab League and prevent any other Arab state from supporting the accords. Nearly all the Arab states subsequently severed ties with Egypt. Jordan and the Palestinians refused to negotiate autonomy, and a three-year attempt by Israel, Egypt, and the United States to develop the plan on their own came to naught. Meanwhile, Begin refused to halt the building of new Jewish settlements in the West Bank and Gaza Strip.

A cold peace

Thus, “seven lean years” after the Yom Kippur War and three decades after independence, Israel had reached peace with Egypt, the Soviets were sidelined, and the Jewish state’s alliance with the United States was consolidated. However, trouble loomed, as a civil war in Lebanon allowed an increasingly well-armed PLO to raid Israel’s northern border. Israel had also begun to fear a military buildup in Iraq, especially its potential for producing nuclear weapons. Nor was the cabinet happy. Both Weizman and Dayan resigned from it, charging that the prime minister did not want to settle the Palestinian issue. The Begin government had also been much less successful in its domestic policies, and the economy, after a brief recovery in 1978–79, entered another inflationary spiral.

Israel faced a complex agenda in dealing with the United States when Ronald Reagan replaced Jimmy Carter as president in 1981. Reagan and his first secretary of state, Alexander Haig, both strong supporters of Israel, promoted a strategic alliance with the Jewish state, but the effort was soon beset by quarrels over the U.S. sale of sophisticated air surveillance aircraft, known as AWACS, to Saudi Arabia. When Israel destroyed Iraq’s French-built Osirak nuclear reactor in a daring raid in June, Washington reluctantly supported a UN condemnation of Israel’s action.

Begin’s policies aroused strong international opposition but aided his victory over Shimon Peres in the June 1981 elections. His new government contained more Likud appointees, including Yitzhak Shamir as foreign minister and Ariel Sharon as defense minister. Then, on October 6, 1981, Sādāt was murdered by Muslim extremists. His successor, Hosnī Mubārak, reaffirmed the 1979 treaty but was prepared only for a "cold" peace with Israel, and few of the bright hopes for trade and tourism promised by the Camp David agreements materialized—even after Israel completed its withdrawal from the Sinai in April 1982.

War in Lebanon

Begin again turned to Lebanon, where he was determined to defeat the PLO. In July 1981, fearing an Israeli-Syrian clash in Lebanon, the United States had brokered an ambiguous cease-fire, during which the PLO continued to amass heavy arms. Cautioned by Haig not to attack unless there was an “internationally recognized provocation,” Begin ordered the bombing of PLO positions in June 1982 after members of a PLO splinter group attempted to assassinate Israel’s ambassador to Britain. The PLO retaliated with a rocket barrage on Israel’s northern border towns, whereupon Israel launched a new invasion of southern Lebanon. The Israeli cabinet authorized a limited operation, and Begin made it clear that IDF troops were not to advance farther than 25 miles (40 km) beyond the Lebanese border. But Sharon had more ambitious plans. Even as Reagan’s special envoy, Philip Habib, attempted to prevent an Israeli-Syrian clash, Israeli jets destroyed Syrian antiaircraft missiles in Lebanon. This strategic surprise attack was followed by a short but violent series of ground skirmishes and two days of aerial combat that cost Syria some 100 aircraft.

Sharon sent the IDF toward Beirut and well beyond the mandated 25-mile limit. With the Syrians in retreat, Israeli troops besieged ʿArafāt and his remaining PLO units in the Lebanese capital. Israel’s Maronite Christian allies, the Phalange Party, contrary to Sharon’s expectations, did not act to secure the city as they had been expected to do, and a dangerous stalemate ensued. The pro-Israel Haig was forced from office, as a bewildered and angry Reagan, reinforced by U.S. Secretary of Defense Caspar Weinberger, sought an Israeli withdrawal. Habib, working under the direction of Haig’s successor, George Shultz, managed to insert a multinational peacekeeping force in Lebanon that allowed ʿArafāt and a portion of his force to evacuate Beirut in August, following a final Israeli bombardment.

The Lebanese Christians, however, were not to benefit from the Israeli actions. Phalange leader Bashir Gemayel, the new president-elect, was assassinated by Syrian agents in September, and in the ensuing disorders, Israeli forces allowed the Phalangist militia into two Palestinian refugee camps, Sabra and Shatila, where they massacred hundreds of men, women, and children. The multinational force, withdrawn quickly after ʿArafāt’s departure, was reinserted.

Shortly before the massacres, President Reagan had announced a plan for Arab-Israeli peace that pointedly applied the Resolution 242 formula to the Palestinian issue. The plan was designed, in part, to appease Arab anger and to revive the Jordanian option, but it was rejected by an Arab summit and hotly opposed by an alarmed Begin. However, the embattled prime minister did not have much time left. An official Israeli inquiry condemned Sharon for negligence in the camp massacres, forcing him to resign. Grieving over Israeli losses and the operation’s tragic outcome, Israelis mounted massive street demonstrations against the Begin government.

Under U.S. mediation, Israel and Lebanon reached a nonbelligerence agreement in May 1983, and Israeli troops withdrew from the Beirut area. An ailing Begin, devastated by his wife’s death and the war’s outcome, resigned in September and retreated into a reclusive retirement, dying in 1992. He was replaced by Yitzhak Shamir. On October 23, 1983, a suicide bomber from the radical Shīʿite Muslim organization Hezbollah blew up the U.S. Marine headquarters at the Beirut airport, which was part of the international peacekeeping force, killing 241. Within a few weeks, Reagan began withdrawing American forces, and after they had left, the Syrians and their local allies forced Lebanon to renounce the agreement with Israel.

The national unity government

Labour outpolled the Likud in the 1984 election, but not by a margin sufficient to form a government. To rescue the economy and extricate Israel from its military entanglement in Lebanon, Labour and Likud formed a national unity government in September, giving the premiership to Peres for 25 months, at the end of which the premiership would go to Shamir, with the understanding that the other would take the position of deputy prime minister of foreign affairs. Notably, Rabin was to be defense minister for both men.

Under Peres, the Israelis began a phased withdrawal from Lebanon in June 1985, except for a security zone where an Israeli-sponsored Lebanese force waged intermittent warfare against the Hezbollah, who enjoyed Iranian and Syrian patronage. An economic recovery plan also was put into place, assisted by the United States. For the first time, Israel began to reform its economic structures, which until then had been controlled by the state and the labour federation, Histadrut.

As stipulated by the rotation agreement, Shamir became prime minister in October 1986, with Peres as foreign minister. Determined to regain the top spot through a diplomatic breakthrough, Peres met secretly with Jordan’s King Ḥussein. The two reached an understanding known as the London Agreement in April 1987, but the agreement’s vague formulations did not command a majority of votes in the unity cabinet, and Shamir retained control.

Shamir continued the Begin policy of settling Jews throughout the West Bank, hoping to isolate the Arab towns and villages that might form the basis for a Palestinian state. Few Israelis responded to this initiative until Sharon, who returned to Shamir’s cabinet as housing minister, began subsidizing residential communities that were within easy commuting distance of Jerusalem and Tel Aviv, where housing was scarce and expensive. By 1992 the Jewish population in the occupied territories was approaching 100,000.

The intifāḍah

The Begin and Shamir governments had gradually abandoned Moshe Dayan’s old policy of leaving the Palestinians alone. By late 1987 the combined effects of settlement expansion, bureaucratic encroachment, land seizures, several years of economic stagnation, and the diplomatic stalemate had set the stage for an Arab rebellion in the West Bank and Gaza that quickly became known as the intifāḍah (Arabic: “shaking off”). This uprising was distinguished by widespread street violence in which children and teenagers battled Israeli troops with rocks and stones.

The Israeli military was caught by surprise and proved ill-equipped to deal with the revolt. A grinding contest of wills ensued that soon claimed many civilian casualties and altered the political landscape. In February 1988 Shamir invited Secretary of State Shultz to intervene, but he tried in vain to revive the diplomatic process. Meanwhile, King Ḥussein had finally abandoned his formal ambition to represent the Palestinians. Israel’s international image was suffering as the media recorded scenes of Israeli soldiers beating young Palestinians in the street. Frequent closures of the areas also severely disrupted the Palestinian economy, and Israel began to replace Arab day labour with immigrant workers from outside the region.

The Israeli election in November 1988 gave Likud a slight majority. Shamir was still forming a government when in December ʿArafāt, speaking at a special UN meeting in Geneva, reiterated a declaration that he had made the previous month that he was ready to recognize Israel and suspend terrorism provided the Palestinians obtained a state. The United States promptly recognized the PLO and opened a dialogue with it.

The question of Palestinian autonomy

This stunning event led Shamir to form another national unity government, with Rabin again as defense minister and Peres as finance minister. Rabin was convinced that Israel needed a political initiative to end the intifāḍah and deflect the PLO. He persuaded Shamir to revive the Camp David-era autonomy plan, but this time it was stripped of its Jordanian component and aimed specifically at the Palestinians. Israel was also facing a new U.S. administration, led by President George Bush, that was determined to restrict Israeli settlement expansion. Efforts by the United States to create an Israeli-Palestinian negotiation on autonomy, however, were rejected by Shamir, who insisted that the Palestinian negotiating team be drawn exclusively from residents of Gaza and the West Bank and not from Jerusalem or the PLO. Peres thereupon resigned from the unity government, only to be outmaneuvered by Shamir, who formed a Likud-dominated coalition that excluded Labour. The prime minister decided to ride out the intifāḍah while concentrating on a sudden breakthrough with the Soviet Union: as part of Soviet leader Mikhail Gorbachev’s reforms, a massive number of Soviet Jews were allowed to emigrate to Israel, the exodus continuing after the Russian Federation was created in the early 1990s. Included among the hundreds of thousands of new arrivals were many highly trained doctors, engineers, and scientists.

The Gulf War and the Madrid Conference

The stalemated Arab-Israeli conflict was soon overshadowed by a crisis in the Persian Gulf, when the army of Iraqi leader Ṣaddām Ḥussein invaded Kuwait in August 1990. As the United States dispatched troops to Saudi Arabia and organized an international coalition against the Iraqi invasion, Ṣaddām attempted to stir up Arab antagonism against Israel. He found ready support among the Palestinians in Jordan and elsewhere, including an endorsement by PLO head ʿArafāt.

The United States greatly feared that its focus on Iraqi aggression would be diverted by Arab grievances against Israel, and when the American-led coalition’s attack was launched, Washington urged Israel not to respond to Iraqi provocations, even after Iraqi forces began missile attacks on Israeli cities. Accepting U.S. air-defense missiles, Israel held its fire while the coalition devastated the Jewish state’s most dangerous Arab opponent. Meanwhile, the Persian Gulf states cut off their previously substantial financial support for the PLO.

Iraq’s defeat and the rapid decline of the Soviet Union in 1991 suddenly opened the way for fresh diplomatic initiatives. U.S. Secretary of State James Baker succeeded in convening an Arab-Israeli peace conference in Madrid in October 1991, the first direct official talks between Israel and its neighbours since the Camp David era. Three “tracks” were created under U.S. auspices that sought to achieve peace treaties between Israel and Jordan, Lebanon, and Syria; an interim Palestinian self-government for Gaza and the West Bank (the Palestinian team this time met the Israeli specifications); and European, Japanese, and Arab support for regional economic cooperation and arms control.

The talks, conducted in various locations, stalled after a promising start. The Palestinians demanded statehood rather than autonomy, and Shamir was not interested in reaching quick agreements. The Israeli leader remained faithful to his strategy of outlasting the other side while continuing to construct Israeli settlements in the West Bank and Gaza. However, Shamir’s policy was hotly contested by the United States, and Bush refused Shamir’s request for housing-loan guarantees to accommodate Russian immigrants unless Israel stopped expanding the settlements.

The Labour opposition, sensing an opportunity, put up Rabin as their candidate for prime minister in the elections of June 1992. He promised security but also flexibility, insisting that he would produce progress in the negotiations. He also proposed that less be spent on settlements and more on help for Russian immigrants. In a hard-fought election, the Labour Party won a narrow advantage.

The Rabin government

Rabin established greater control in this premiership than in his earlier one by keeping the defense portfolio to himself and appointing a negotiating team that reported to him rather than to Peres, his foreign minister. His coalition was delicately balanced between left and right and relied on a Sephardic religious party, Shas, to offset the strongly antireligious Meretz Party.

Rabin criticized the comprehensive approach implicit in the Madrid talks, concluding that the Palestinian-Israeli track held more promise for progress because both Israelis and Palestinians wanted to move beyond the status quo of the intifāḍah. To stimulate diplomacy and to patch up relations with the United States, he ordered a freeze on the construction of Israeli settlements in the occupied territories, which allowed the Bush administration to approve housing guarantees for Russian immigrants. (In fact, some previously planned construction continued in the territories, and the settler population grew from 100,000 to 135,000 during Rabin’s term.)

Unexpectedly, the negotiations with Syria came to life first, but after an encouraging start they had deadlocked by the summer of 1993. Syria refused to specify what it meant by “full peace,” a key Israeli requirement; and Israel refused to withdraw to the armistice lines as they were prior to the 1967 war, which would have effectively placed the border with Syria on Lake Tiberias (the Sea of Galilee), Israel’s largest source of fresh water.

The Oslo Accords

Meanwhile, Peres had been nurturing a secret negotiating track with the Palestinians through Norwegian diplomacy. The PLO officials conducting the so-called unofficial discussions in Oslo, Norway, were far more flexible than the official non-PLO Palestinian delegation in Washington, and Rabin decided to gamble that ʿArafāt was the only Palestinian leader who could conceivably deliver peace. ʿArafāt also gambled. He was short of money after alienating his main financial backers during the Gulf War and faced challenges to his leadership from Islamic groups, whose influence had grown significantly in the occupied territories during the intifāḍah. He accepted the idea of Palestinian autonomy in order to at last obtain a foothold in Palestine.

The Declaration of Principles and Cairo Agreement

In September 1993, Israel and the PLO signed the Declaration of Principles on Palestinian Self-Rule, the first agreement between the two sides and the initial document in what became generally known as the Oslo Accords. While the United States had not been aware of the seriousness of the discussions in Oslo, both Rabin and ʿArafāt were happy to embrace U.S. President Bill Clinton on the White House lawn in September 1993, in support of their deal. A visibly reluctant Rabin consented to shake ʿArafāt’s hand.

The Oslo Accords, in fact, comprised a series of agreements, the second of which, the Cairo Agreement on the Gaza Strip and Jericho, was signed in May 1994. This pact enacted the provisions set forth in the original declaration, which had endorsed a five-year interim self-rule for a Palestinian authority to be executed in two stages: first in Gaza and the city of Jericho and then, after an election, throughout the remaining areas under Israeli military rule. Talks on final status were to begin after three years, with a two-year deadline for an agreement to be reached. Issues such as borders, the return of refugees, the status of Jerusalem, and Jewish settlements in the occupied territories were reserved for final status talks. The PLO recognized Israel’s right to exist, renounced terrorism, and agreed to change the portions of its charter that called for Israel’s destruction. Israel recognized the PLO as the sole representative of the Palestinian people.

The accords embodied two basic sets of exchanges. First, Israel would shed responsibility for the Palestinian population while retaining strategic control of the territory. The Palestinians would be rid of Israeli military rule and gain self-government, potentially leading to statehood. Second, ʿArafāt’s disavowal of violence and his pledge to fight terrorism—through the use of a domestic Palestinian police force—would improve Israel’s security. The Palestinians would benefit from the large amount of foreign aid it would receive from the United States and other countries and from economic agreements made with Israel that were designed to foster employment and trade.

Challenges to peace

Rabin’s decision aroused enormous opposition from the Likud and most settlers, although the majority of Israelis at first strongly supported him, especially since the agreement enabled Israel to rid itself of the tumultuous Gaza Strip. In October 1994, Jordan also signed a comprehensive peace treaty with Israel, and many other Arab states, including the smaller Persian Gulf emirates, began to discard the old taboos about contact with the Jewish state.

Not all Palestinians, however, favoured ʿArafāt’s course. The Islamic group, Ḥamās, which was especially strong in Gaza, violently opposed the Oslo Accords and launched a series of terror attacks on Israeli civilians, killing scores between 1993 and 1997. Rabin retaliated with border closures that prevented tens of thousands of Palestinian workers living in the occupied territories from commuting to jobs in Israel. Some Israelis sought revenge, such as the murder in February 1994 of some three dozen Arabs at prayer in Hebron’s Tomb of the Patriarchs by an Israeli settler. Despite Israeli protests, ʿArafāt sought to co-opt rather than repress Ḥamās. Israel therefore continued its own antiterrorism war, and two Ḥamās leaders were assassinated in 1994–95, one in Gaza itself.

Economic boom

Peace diplomacy bolstered what had already been a period of strong economic expansion in Israel. Austerity during the 1980s had wrung out bad debt and inefficiency at considerable cost. Many kibbutzim, deprived of cheap credit and a subsidized water supply, had either failed or shifted from agriculture to light industry. Koor Industries Ltd., Histadrut’s industrial holding company, had itself fallen on hard times and defaulted on a number of loans before it was restructured. The Israeli government still controlled half the economy, but the earlier socialist ideology, once the mainstay of Israeli politics, was clearly on the wane.

In the late 1980s the Israeli economy was buoyed by the influx of highly skilled Russian immigrants, a competitive high-technology sector, and the country’s proximity to the European market. In the period 1990–95, Israel’s rate of economic growth exceeded 5 percent annually, unemployment was cut nearly in half, and the annual inflation rate dropped from double to single digits. Foreign investment turned from a trickle into a flood, as Israeli exports to Asia also registered large increases and the Arab boycott eased.

By 1996 Israel’s GNP was greater than that of Jordan, Syria, and Lebanon combined, and its per capita income was approaching European standards. All this made Israel an economic powerhouse in the region and allowed its leaders to look at a future of decreasing dependence on economic aid from the United States.

Oslo II and Rabin’s assassination

In September 1995, Rabin, ʿArafāt, and Peres, all newly named winners of the Nobel Prize for Peace, assembled again on the White House lawn to sign the Interim Agreement on the West Bank and Gaza Strip (often called Oslo II). This detailed and long-delayed agreement established a schedule for Israeli withdrawals from the Palestinian population centres (to be implemented in several stages) and created a complex system of zones that were divided between areas fully controlled by the Palestinians, those under Palestinian civil authority but Israeli military control, and those exclusively under Israeli control. It also set elections for a president and council of the Palestinian Authority, which would govern the Palestinian population in the occupied territories.

Although Oslo I had received strong parliamentary support, Oslo II was ratified by only one vote in the Knesset, signaling a significant loss of support for Rabin. Many Israelis were angry over ʿArafāt’s erratic cooperation on security, and others, especially the Likud—now led by Israel’s former ambassador to the UN, Benjamin Netanyahu—hotly opposed withdrawals or further dealings with ʿArafāt. Meanwhile, the Sephardic Shas Party had left the coalition in protest over the indictment of its parliamentary leader for fraud. Bereft of his coalition’s balance, Rabin had to depend on the vote of the Israeli Arab members of the Knesset for his majority. He was also battered by demands from the Meretz Party and from Conservative and Reform Jews in the United States to loosen the Orthodox religious monopoly established in the early years of the state.

Shortly after Oslo II was passed in the Knesset, Rabin decided on a public campaign to rally his supporters, and it was following the first such rally in Tel Aviv in November 1995 that he was assassinated by a Jewish religious fanatic. Israelis were horrified, and after a funeral attended by many international leaders, including Arabs, a round of soul-searching and recriminations began. Popular Israeli support for the peace process surged, and with the Likud on the defensive, Shimon Peres, Rabin’s successor as prime minister, proceeded with Oslo II. By early 1996 nearly all the Palestinians were under self-rule; Israeli forces, though withdrawn from the major towns except Hebron, still controlled most of the occupied territories. In January, ʿArafāt easily won election as president of the Palestinian Authority. The voters also selected a Palestinian Council, although its powers were ill-defined. Peres also sought to accelerate an Israeli-Syrian deal but soon concluded that such an agreement could not be reached quickly, if at all.

A new political landscape

Peres had hoped to capitalize on sympathy for Rabin and chose to hold early elections in 1996. His campaign was quickly upset by a series of Ḥamās suicide attacks against civilians that shocked and angered Israelis. The United States convened an international antiterrorist conference in March to support Peres, but the prime minister lacked Rabin’s security credentials and had been an outspoken advocate of partnership with ʿArafāt. Peres reacted to Hezbollah attacks along the Lebanese border by ordering a massive artillery bombardment of southern Lebanon that mistakenly hit a UN outpost sheltering hundreds of civilians, which damaged his standing among Israeli Arabs. In addition, Labour had lost popularity among religious voters because of its alliance with Meretz.

The Netanyahu premiership

The May elections were the first held under a new law that allowed separate ballots for prime minister and the Knesset, which was designed to reduce the ability of smaller parties to exact concessions when governments were formed. However, this law had the opposite result: it created a quasi-presidential regime that still depended on an increasingly fractured parliament. Peres narrowly lost to Netanyahu, who promised that he would be tougher on ʿArafāt than Peres had been. In the Knesset, however, both Labour and Likud unexpectedly lost ground, while the smaller parties, especially the religious bloc, gained large numbers of seats. An ethnic Russian party, Yisrael BʾAliyah, led by the celebrated Soviet-era dissident Anatoly (Natan) Sharansky, also won seats. The growth of the Shas Party and the emergence of a Russian ethnic bloc offered compelling evidence not only of their grievances against previous governments but of the failure of the major political parties to integrate these constituencies.

Netanyahu, age 46, the first Israeli prime minister born after the founding of the state, promised to accelerate economic reforms, especially the sale of state-owned businesses, but he was quickly confronted by labour union opposition, a slowing economy, and a large budget deficit. He had been a severe critic of the Oslo Accords but, after Rabin’s murder, had promised to fix the agreements by insisting on Palestinian “reciprocity” (i.e., strict adherence to the terms). Nonetheless, Netanyahu could not bring himself to meet ʿArafāt until September 1996 and raised doubts over his willingness to proceed with the promised Israeli withdrawal from Hebron and other unfinished aspects of Oslo II.

Crisis in the peace process

ʿArafāt had finally acted against Ḥamās in the spring and summer of 1996, but Israel’s surprise opening of an archaeological tunnel exit at the north end of the Western Wall in Jerusalem in September 1996 allowed ʿArafāt to play on Palestinian fears that the tunnel was a threat to Al-Aqṣā Mosque. Another violent round of protests ensued, in which Palestinian police fired on Israeli soldiers, killing more than a dozen, while some 60 Arabs died. Clinton, fearing the end of the peace process, called an emergency summit in the White House, after which the Israeli prime minister warmly shook ʿArafāt’s hand for the cameras. Netanyahu refused to close the tunnel, but he pledged an accelerated effort to negotiate an agreement on the West Bank city of Hebron, which was reached in January 1997.

Netanyahu’s cabinet narrowly approved the Hebron Agreement. Part of the price for this action became clear when Israel began constructing a long-planned but often delayed Jewish neighbourhood on the outskirts of Jerusalem, which would effectively cut off the Arab villages on the eastern side of the city from the rest of the West Bank. ʿArafāt held his protest of this project until the cabinet’s decision on the first of three projected Israeli withdrawals in March. When these withdrawals turned out to be far less significant than ʿArafāt had anticipated, the stage was set for another round of protests that quickly escalated into violence. Meanwhile, ʿArafāt released Ḥamās activists from Palestinian jails and suspended security cooperation with Israel. Netanyahu, fearing that his cabinet would not approve any more interim steps, argued that Israel and the Palestinians should begin intensive negotiations to determine the final status of the territories. This proposal was quickly rejected by both ʿArafāt and the United States.

The Wye River Memorandum

The breakdown of direct Israeli-Palestinian negotiation at high levels led the United States to intervene again in early 1998 to end the stalemate. Both sides met in rural Maryland in October, and after intensive negotiations that included President Clinton’s active participation produced the Wye River Memorandum. The new agreement restored old Israeli promises (such as the opening of a Palestinian airport and a safe passage route between Gaza and the West Bank) for old Palestinian promises (such as publicly renouncing the PLO Charter’s anti-Israel provisions, collecting unauthorized arms, and implementing antiterrorist actions), but its novelty consisted of linking phased Israeli withdrawals to Palestinian actions and greatly enlarging the role of the United States as an active participant in both monitoring and judging the performance of the parties. Wye promised to put two-fifths of the West Bank under partial or total Palestinian control.

Netanyahu returned from Wye to face growing political trouble. The Bank of Israel had been using high interest rates in a dramatic effort to reduce Israeli inflation. While the policy succeeded overall (the inflation rate was cut by two-thirds) it also precipitated a recession and rising unemployment, which hit hardest in the poorer sectors of society—notably the largely Sephardic residents of the development towns in the south. Concurrently, the government’s budget had been reduced, which hampered the prime minister’s ability to satisfy the demands of the various coalition members. In early 1999, after a legislative defeat on the budget, Netanyahu called for early elections and soon suspended the Wye agreement.

The Barak gamble

The May 1999 Israeli election produced an even more fractured Knesset than the one three years earlier. Whereas in 1992, under the old, purely parliamentary system, the two largest parties had between them won 76 of the 120 seats, by 1999 they could command only 45. Labour, renamed One Israel in coalition with two small parties, had the most seats in the Knesset, while Likud, beset by infighting and a stalled economy, was second. The real surprise of the election was the sudden growth of Shas, which now commanded the third-largest number of seats.

Labour’s candidate for prime minister was a retired general, Ehud Barak, who triumphed over Netanyahu by a decisive margin. Barak, the most decorated soldier in Israeli history, had promised a renewed drive for peace, economic growth, and resistance to religious demands. He assembled a broad coalition in the Knesset and set about reviving the peace process with both the Palestinians and Syrians with a certain sense of urgency—ʿArafāt had already threatened to declare a Palestinian state unilaterally at the time of the Wye summit, Syrian President Ḥāfiẓ al-Assad was seriously ill (he died in June 2000), and President Clinton wished to achieve a peace agreement before the end of his term in office.

In Barak’s view, new elements existed that made rapid progress toward peace possible on both the Syrian and Palestinian fronts. Like his predecessor, he wanted definitive talks with ʿArafāt about the final status of the territories before vacating much more land, but he encountered heavy resistance to his plans from both foreign and domestic sources. The Palestinians would not agree to abandon the third and final troop withdrawal promised under Oslo II; ʿArafāt put off the declaration of a Palestinian state but insisted on maximum American intervention and sought the most territory he could recover before the final negotiations. However, he did agree to Barak’s deadline of February 15, 2000, to reach a framework agreement, which was to be preceded by another withdrawal. These new arrangements were incorporated in the so-called Wye II agreement, reached in September 1999. None of the deadlines was met.

As the prime minister expected and ʿArafāt feared, the Syrians suddenly signaled their desire to negotiate in early December. Barak himself traveled to the United States to negotiate with Syrian Foreign Minister Fārūq al-Sharʿ, under Clinton’s patronage. A second session in early January 2000, however, ended when Syrian President Assad broke off the talks, raising the old demand that Israel agree to a return to the borders that existed between the two countries before the Six-Day War as a precondition to further negotiations.

By early March, however, progress again seemed possible on the Syrian front. Assad agreed to a summit with President Clinton at Geneva, but to U.S. and Israeli surprise he yet again insisted on Syria’s right to its pre-1967 positions on Lake Tiberias. Neither Barak nor a majority of Israelis would agree to this demand. Barak then carried out his campaign promise to withdraw Israeli troops from Lebanon, even without an agreement with Syria, to a border demarcated by the UN.

Barak’s willingness to concede to Arab demands and his mishandling of his coalition destroyed his Knesset majority in June. Nonetheless, he decided to attend Clinton’s hastily arranged summit at Camp David in July. This last-ditch effort to reach an agreement between ʿArafāt and Barak had been resisted by the Palestinian leader, who stated ahead of time that he could not concede Palestinian rights. This proved to be the case. Barak’s unexpected willingness to share Jerusalem with the Palestinians was not reciprocated by ʿArafāt, who on this—as on the issue of the return of refugees—refused to compromise, demanding nothing less than full Palestinian sovereignty in East Jerusalem.

The second intifāḍah

ʿArafāt returned home from the summit to Palestinian and popular Arab acclaim. He had said “no” to both Israel and the United States. In contrast, Barak’s political support evaporated. As he struggled to survive, a new blow fell when the Palestinians erupted in violence following a visit by Likud leader Sharon to the Temple Mount in September to promote Israeli sovereignty over the site. Rioting by Israeli Arabs further disturbed the situation. As international efforts to restore peace failed, cameras recorded the death of a 12-year-old Arab boy by gunfire in Gaza, and not long thereafter two Israeli soldiers were lynched in the West Bank. By spring 2001, hundreds had been killed, most of them Palestinians. President Clinton made one last attempt to bridge the gap, but neither side accepted his “parameters.”

The failure of the Camp David summit and the outbreak of what came to be known as the Aqṣā intifāḍah convinced a majority of Israelis that they lacked a partner in ʿArafāt to end the conflict. Barak paid the political price, losing the premiership to Sharon by nearly 25 percent of the vote in elections held in February 2001. Sharon formed a broadly based coalition government.

The violence continued and escalated, even though Sharon in late 2003 announced a “disengagement plan” that called for Israel to withdraw its soldiers and remove Israeli settlers from the Gaza Strip and parts of the West Bank. The death of ʿArafāt in late 2004 paved the way for Israel and a more moderate Palestinian leadership to resume negotiations, and a cease-fire was agreed to in early 2005 that reduced significantly the level of violence. Despite considerable opposition to Sharon’s disengagement plan within Likud, Israel completed its pullout in September 2005. Sharon by then was weary of party infighting and, with other Likud moderates, formed the centrist Kadima (“Forward”) Party in November. He fell victim to a debilitating stroke in early 2006, just before parliamentary elections, and Ehud Olmert became acting prime minister.

Kadima under Olmert won the largest share of Knesset seats. His stated goals were to withdraw more Israeli troops and settlers from the West Bank and finalize Israel’s borders by 2010. However, the unexpected victory by Ḥamās in Palestinian elections earlier in 2006 brought a new uncertainty to Israeli-Palestinian relations, as did the Ḥamās takeover of the Gaza Strip in 2007. Israel recognized the West Bank administration, led by the more moderate Palestinian organization Fatah, as the legitimate Palestinian government and later declared the Gaza Strip under Ḥamās a hostile entityand implemented a series of sanctions. Israel then imposed a blockade on the Gaza Strip, sealing border crossings and heavily restricting imports. Ḥamās attacks on Israel continued, as did Israeli retaliatory strikes and attacks aimed at Ḥamās militants.

After months of negotiations, in June 2008 Israel and Ḥamās agreed to implement a truce scheduled to last six months; however, this was threatened shortly thereafter as each accused the other of violations, which escalated in the last months of the agreement. When the truce officially expired on December 19, Ḥamās announced that they did not intend to extend it. Broader hostilities erupted shortly thereafter as Israel, responding to sustained rocket fire, mounted a series of air strikes across the region—among the strongest in years—meant to target Ḥamās. After a week of air strikes, Israeli forces initiated a ground campaign into the Gaza Strip amid calls from the international community for a cease-fire. Following more than three weeks of hostilities—in which perhaps more than 1,000 were killed and tens of thousands left homeless—Israel and Ḥamās each declared a unilateral cease-fire.

Meanwhile, conflict with Hezbollah in neighbouring Lebanon was also an ongoing challenge. The abduction of two Israeli soldiers by Hezbollah in mid-2006 sparked a controversial 34-day war on Lebanese soil in which Israel failed to free its soldiers or eradicate Hezbollah, and the war, in which more than 1,000 Lebanese and more than 150 Israelis were killed, drew both domestic and international reproach. Although the final report, issued in January 2008 by the Winograd Commission (a body of inquiry convened to investigate the conduct of the July 2006 campaign), was highly critical of the upper echelons of Israeli political and military leadership, its appraisal of Olmert in particular was not as harsh as some had anticipated.

Olmert’s public standing was further weakened, however, by allegations of corruption, the most high-profile of which alleged that he had accepted large sums of money from an American businessman before his tenure as prime minister. In the course of the subsequent inquiry, Olmert argued that the contributions were used to legally finance his election campaign, but he pledged to step down if charged. Calls for his resignation mounted as the inquiry progressed, and in July 2008 Olmert announced that he would step down after party elections scheduled for the fall of that year. In the September election, one of Olmert’s rivals, Tzipi Livni, emerged as the leader of Kadima. As promised, Olmert formally resigned, although he remained leader of an interim government until a new prime minister could be selected. Livni was unable to form a coalition government, however, and elections were called for February 2009.

Although the election results indicated that Livni’s Kadima had secured one Knesset seat more than Netanyahu’s Likud, neither party had attained a majority, and the narrow margin of the results made it unclear which party leader would ultimately be invited to form a governing coalition. Through the course of coalition discussions in the days that followed, Netanyahu gathered the support of Yisrael Beiteinu (15 seats), Shas (11 seats), and a number of smaller parties, and he was asked by Israel’s president to form the government.

The Netanyahu government presided over a period of turbulence in both foreign and domestic affairs. Israel faced heavy international criticism in May 2010 when the Mavi Marmara, a civilian ship carrying pro-Palestinian activists, was raided by Israeli naval commandos in international waters as it sailed toward the Gaza Strip in an effort to break Israel’s naval blockade. Nine people—eight Turkish citizens and one with dual Turkish-American citizenship—were killed when the commandos opened fire after being attacked by activists armed with clubs and knives. In September Israeli and Palestinian leaders briefly resumed direct talks at the urging of the United States. However, after only three weeks, the talks came to a halt when Israel refused to renew a moratorium on the construction of Jewish settlements in the West Bank. In response, the Palestinians broke off negotiations.

In 2011, developments in the Middle East threatened to weaken some of Israel’s important strategic alliances. A popular uprising in Egypt led to the deposal in February of President Mubārak, long considered a key ally of Israel. In August relations between the two countries soured after Israeli forces killed five Egyptian police officers near the Egypt-Israel border while responding to an attack by militants who had fled across the border into Egypt. The incident stoked outrage in Cairo, where a crowd of protesters broke into the Israeli embassy in September, forcing the evacuation of Israeli diplomats from Egypt. Meanwhile, Turkey, another important strategic ally, expelled Israel’s ambassador and suspended its military agreements with Israel over the country’s refusal to apologize formally for the Mavi Marmara incident.

Domestically there was an increase in popular unrest. In July 2011, activists set up tents in downtown Tel Aviv to protest the high cost of housing in Israel. As demonstrations spread throughout the country, the protest movement widened its focus, decrying social and economic inequality in Israel and calling on the government to increase its support for transportation, education, child care, and other public services. The protest movement continued to gather momentum in August and September, with more than 400,000 people reportedly taking part in a day of protest on September 3.

In September 2011, Israeli officials opposed a request by the president of the Palestinian Authority, Mahmoud Abbas, that the United Nations Security Council recognize Palestinian independence by granting full UN membership to a Palestinian state. They argued that Palestinian statehood could only be achieved through negotiations with Israel.

A changing society

At the beginning of the 21st century, Israel was poised on the brink of significant change. At home the Israelis found themselves grappling with both perennial and new problems that included not only the old issue of religion and state and how these institutions relate to Jewish identity but also new pressures to reduce religious influence over personal matters such as marriage and divorce and to allow non-Orthodox rabbis to conduct these and other religious ceremonies—raising the very issue of who may legitimately be called a rabbi. Likewise, Israel faced the question of how to assimilate more than 250,000 non-Jews who had been part of the Russian emigration, raising the question of how one becomes a Jew. No less problematic was the issue of a large Arab minority that continued to assert its rights and demand equality in a Jewish state.

On the economic front, Israel had only partially completed its transformation from a socialist state into a more competitive market system by the end of the 20th century. Israel’s military, long a unifying social institution, not only needed to counter new dangers from states such as Iraq and Iran (which both had long-range missiles) but also had to face the difficulties of changing to a more technical, less manpower-intensive force. Likewise, the political system badly needed reform following the failed experiment with direct elections for prime minister. Against this list of challenges, Israel could marshal its large and highly trained workforce, a dynamic technical sector, a large per capita gross national product, a record of absorbing large groups of immigrants, and a powerful army.

Prime ministers of Israel

The table provides a chronological list of the prime ministers of Israel.